Today’s Covid-19 crisis is starting to look more and more like a soccer match between two rival cities, where supporters of the two teams face each other, and emotions run high. The Covid-19 crisis hits all of us. People all over the world feel the impact on their daily lives. Not only on the social level, but mainly economically.

By Erwin Sanders
As a result of draconian social and economic measures, people are forced to stay at home. Economies are being largely shut down. Consequently, people in weaker European economies will feel the pain first. The crisis is already there.

After Italy, Spain is now the second European country to have been hit disproportionately hard. Both nations didn’t learn from the 2008 financial crisis and didn’t take important measures, such as creating a sufficient financial buffer to weather a new crisis like the one upon us.
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Various southern European countries, such as Spain, Portugal, Italy, and even Greece, were seeking to introduce the so-called coronabond before the Covid-19 pandemic, also known as the Eurobond. A relatively easy way for them not to go bankrupt. These bonds should allow states to raise funds in the financial markets for a limited period to help them get back on track. Meant to prevent some of the worst-affected countries from being sunk by new debts they can’t repay. Is borrowing more money the best way for these countries to survive this new crisis?

The battle in the Eurozone is ongoing. In Northern European countries like the Netherlands we have a lot of taxation: on our income, on our goods, basically on everything. We are obliged to work longer and retire later so we can all save more money for our pensions.

In Southern European countries, this is less common. They pay less in taxes and have different rules and regulations for pensions, etc. Should this not first be aligned before we introduce something like coronabonds? Otherwise, we might end up in a situation again where we – Northern Europe – pick up the tab for the southern part of Europe, as we did in 2008 with the global financial crisis.

An even more important question: will the heat, one day, be so high that the EU will fall apart and split into northern and southern entities? Or are we doomed to keep on helping and financially supporting them, crisis after crisis?

Lack of solidarity
Southern Europe accuses the North (especially my country, the Netherlands) of lacking solidarity. Italy, which was hit disproportionally hard by the Covid-19 crisis, leads the way. In an angry open letter, some mayors and opinion leaders wrote that the Dutch government lacks compassion for its tough line on EU measures to support countries hard hit by the coronavirus crisis and shows a lack of solidarity with its fellow EU countries.

Fortunately, crisis negotiations this week forced the coronabonds off the table, at least for now. This week, a messy compromise to unlock € 500 billion in emergency EU support for countries hit hardest by the coronavirus pandemic has been struck after Italy’s prime minister, Giuseppe Conte, warned that the existence of the bloc was at stake. Instead of Euro- or coronabonds, we are now talking about a European 'Recovery Fund'. Who can still follow all this?

Most people in the Netherlands are not at all amused by these developments. How much of this 500 billion is reserved for the Netherlands? It remains unclear. It is not that we do not want to help other countries or that we lack solidarity; what will be the next step?

In the aforementioned letter, Italy wrote that Holland offered 1 billion euros to the countries in the south. Do the 2008 financial crisis and the current one not just reveal that financial discipline in Southern and Northern European countries is far apart, making it better to consider another way to work together?

We are always there
Right after the before mentioned letter Italy wrote, Holland offered 1 billion euros to the countries in the south which are suffering the most from this crisis. Hoping several other countries would follow suit. The money is intended for medical treatment and initial financial aid.

In my opinion, it is now time for Southern European countries to listen closely to their Northern European counterparts. Listen to how to build up enough financial buffers to stay strong enough to survive the next crisis, which will happen sooner or later.
How long will this debate continue? Into eternity, or is it maybe time to break up?

Erwin Sanders is a positive young Dutchman. He is concerned with what is happening in the world, but he refuses to participate in the coronavirus hysteria. He likes to stay optimistic instead.